U.S. v. One Million Three Hundred Twenty-Two Thousand Two Hundred Forty-Two Dollars and Fifty-Eight cents ($1,322,242.58)
| Decision Date | 12 July 1991 |
| Docket Number | 90-3406,FIFTY-EIGHT,Nos. 90-3368,TWENTY-TWO,FORTY-TWO,s. 90-3368 |
| Citation | 938 F.2d 433 |
| Parties | , 20 Fed.R.Serv.3d 81 UNITED STATES of America, Appellee, v. ONE MILLION THREE HUNDREDTHOUSAND TWO HUNDREDDOLLARS ANDCENTS ($1,322,242.58), etc., Road Atlanta, Inc. & Reginald Donald Whittington (Intervenors), Reginald D. Whittington, Appellant. |
| Court | U.S. Court of Appeals — Third Circuit |
Kent A. Jordan (argued), Office of U.S. Atty., Wilmington, Del., for appellee.
Paul R. Regensdorf (argued), Fleming, O'Bryan & Fleming, Fort Lauderdale, Fla., for appellant.
Before STAPLETON and ALITO, Circuit Judges, and CAHN, District Judge *.
Two claimants in this forfeiture action brought by the United States under 21 U.S.C. Sec. 881 contest the dismissal of their claims for failure to comply with discovery orders. We will affirm.
In November 1988, the United States obtained a warrant to seize more than $1.3 million dollars held in the name of Reginald Donald Whittington in the Bank of Delaware, in Wilmington, Delaware. In support of the warrant application, the United States submitted an affidavit by an agent of the Drug Enforcement Administration. In this affidavit, the DEA agent asserted that he had been informed by an agent in Fort Lauderdale, Florida, that Reginald Whittington and his brother, William Whittington, had been involved for several years in a major drug smuggling and distribution operation and that both brothers had pled guilty to federal criminal charges relating to this operation in the Southern District of Florida in 1986. During the guilty plea proceeding in that case, the affidavit stated, the prosecution alleged and the Whittingtons acknowledged that William Whittington had been responsible for arranging the smuggling and distribution of drugs and that Reginald Whittington had laundered and invested the proceeds. The affidavit stated that William Whittington had been sentenced to 15 years' imprisonment and had agreed to forfeit $7 million. According to the affidavit, Reginald Whittington had been sentenced to 18 months' imprisonment. While Reginald Whittington was still in prison, the affidavit stated, the agent in Florida received a telephone call from an anonymous individual who appeared familiar with the Whittingtons and their operation and who said that the Whittingtons had hidden $3 million in gold and that Reginald Whittington was going to retrieve and dispose of this gold after his release from prison in March 1988. The affidavit further stated that in November 1988 Reginald Whittington deposited 100 kilograms of gold with the precious metals depository at the Bank of Delaware and that the bank sold the gold at Whittington's request for $1,322,212.04.
After the seizure warrant was issued and executed, the Bank of Delaware gave the United States Marshal a check for $1,322,242.58, and the Marshal deposited this check in the Justice Department's Seized Asset Deposit Fund, an account with the United States Treasury. A few days after the seizure, Reginald Whittington filed a document with the United States District Court for the District of Delaware that was entitled "CLAIM" and that asserted that Reginald Whittington was "the lawful owner of the defendant property."
The United States subsequently filed a complaint for forfeiture in rem. The complaint alleged that from 1977 to 1982 Reginald and William Whittington imported tons of marijuana into the United States and realized millions of dollars in profits. Since 1977, the complaint alleged, Reginald Whittington's primary source of income had been "derived directly and indirectly from the importation and sale of controlled substances." In 1985, the complaint stated, "Reginald Whittington purchased 189 kilograms of gold at the Bank of Delaware, using profits made from the importation of drugs." In November 1988, according to the complaint, Reginald Whittington brought back and deposited 100 kilograms of gold with the Bank of Delaware.
Several months after the forfeiture complaint was filed, Road Atlanta, Inc., a small Georgia corporation 94% of the stock of which is owned by Reginald Whittington, filed a claim asserting that it was the "lawful owner" of the seized cash. At the same time, Reginald Whittington and Road Atlanta, Inc. filed joint motions to intervene in the forfeiture proceeding and to dismiss the forfeiture proceeding on the ground that it violated the Whittingtons' plea agreements 1 in the criminal prosecution in the Southern District of Florida. In the event that the motion to dismiss was denied, Reginald Whittington and Road Atlanta sought a transfer of the forfeiture proceeding to the Southern District of Florida. The motion to intervene was granted with the government's consent but, after briefing and argument, the remaining motions were denied in July 1989.
On August 25, 1989, the United States served interrogatories upon Reginald Whittington and served requests for production of documents upon both claimants. No responses were provided by either claimant within 30 days (i.e., by September 25) as required by Fed.R.Civ.P. 33(a) and 34(b). Counsel for the claimants first promised to provide responses by October 6, 1989. When that deadline was not met, counsel for the claimants promised to provide responses within one week and stated that he did not "anticipate that the entire week [would] be required." This commitment was also broken.
On November 7, 1989, the government attorney wrote to counsel for the claimants requesting that he call at his "earliest convenience so that [they could] avoid litigating a motion to compel discovery." This letter apparently elicited no response.
On December 29, 1989, the government attorney sent a letter to the claimants' local counsel, with a copy to their Florida counsel, stating that a motion to compel discovery would be filed unless full discovery responses were delivered by January 4, 1990. When no responses were received, the government moved for an order compelling the claimants to respond to the discovery requests. The claimants submitted no response to this motion, and on January 29, 1990, the district court entered an order requiring them to furnish complete responses to all the discovery requests within 10 days. Pursuant to Fed.R.Civ.P. 37(a)(4), the court's order also directed the claimants to pay for the government's expenses in bringing the motion to compel. Although the claimants paid this sanction (a sum stipulated to be $425.00), the claimants provided no responses to the outstanding discovery requests. Accordingly, on February 26, 1990, the government moved for dismissal of their claims under Fed.R.Civ.P. 37(b)(2)(C). The claimants did not respond to this motion, and on March 5, 1990, the district court entered an order dismissing their claims and declaring that the defendant property was forfeited to the United States.
On March 15, 1990, Road Atlanta, Inc. (but not Reginald Whittington) moved for reconsideration or relief from the court's order pursuant to Fed.R.Civ.P. 59 and 60. This motion provided little explanation for the claimants' failure to comply with the government's discovery requests or the court's order compelling discovery. Aside from vague suggestions that some efforts to locate requested documents had been made, the only explanation provided was the following comment: "[I]t should be pointed out that the original criminal action which was brought in the Southern District of Florida created issues with respect to the ability to respond and the appropriateness of response to the United States Government, vis-a-vis documents relative to the earlier pending criminal case." The motion also stated that some corporate records had been furnished to the government subsequent to dismissal of the claims and that attempts were being made to locate other corporate records on public file in Georgia. The government opposed Road Atlanta's motion, asserting that Road Atlanta still had not responded to eight of the government's ten requests for production of documents. The government's response also represented that counsel for Road Atlanta had stated that Reginald Whittington would not respond to any discovery requests but would assert his Fifth Amendment privilege against compelled self-incrimination. After the forfeiture order was entered, the money was transferred from the Justice Department's Seized Asset Deposit Fund to another Treasury account, the Justice Department's Asset Forfeiture Fund.
On April 3, 1990, the district court wrote to Road Atlanta's counsel stating that its motion would be denied unless within two weeks counsel "present[ed] to the court positive proof that Road Atlanta will provide meaningful responses to the United States' legitimate discovery requests, as opposed to Mr. Whittington's merely asserting blanket fifth amendment rights." Precisely two weeks later, counsel for Road Atlanta responded to the court's letter. Counsel asserted that many financial records had already been furnished and that two individuals, a representative of the corporation's accounting firm and an individual who "functioned essentially as Road Atlanta's manager during the pendency of the criminal proceeding in Fort Lauderdale," would be available to testify regarding those records. Counsel confirmed, however, that "Reginald D. Whittington has and will continue to invoke his Fifth Amendment privilege."
After receiving this response, the district court denied Road Atlanta's motion. The court noted that "counsel for Road Atlanta has represented to this Court that Reginald Donald Whittington will not present testimony [relating to the source of the defendant money], but instead, Whittington will invoke his Fifth Amendment rights in response to any question as to the source of the funds." The order stated that "in the absence of testimony from Whittington, the United States...
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